In November, we reported on the New York Court of Appeals' decision in Kramer v. Phoenix Life Insurance Company, 15 N.Y.3d 539 (2010), in which the Court determined that a person may purchase a life insurance policy and then immediately transfer it to someone who lacks an insurance interest in that life, even if the policy were purchased with the intent of selling it. The case came to the Court of Appeals on a question certified by the Second Circuit. In mid-January, the Second Circuit issued a formal mandate, vacating a Southern District court's decision that held to the contrary.
The district court has now issued an order to show cause, requiring all parties to show why the case should not now be dismissed, with prejudice. Filings are due to be submitted on March 1, 2011. Because New York's highest court has settled the law on the central issue in the litigation, we expect that the plaintiffs' case will encounter significant difficulties. We expect that the end result will be a dismissal of the litigation, meaning that Mrs. Kramer's efforts to collect on several of her late husband's life insurance policies will come to an end.